The escalating tensions between Russia and Ukraine have consistently impacted global markets, particularly the energy sector. Recent reports, originating from Axios, suggest a potential shift towards a US-led resolution to the conflict by year-end. This news immediately triggered a sell-off in oil prices, impacting not just crude but also related petroleum products. Understanding the technical implications of this development is crucial for traders and investors navigating these volatile times. We will examine the potential impact on US oil (WTI) and provide a detailed technical analysis to identify possible trading opportunities.
Impact of Potential Resolution on Oil Markets
The possibility of de-escalation, coupled with hints from Ukrainian President Zelenskyy regarding renewed negotiations, has introduced a significant bearish factor into the equation. For months, the war’s continuation provided upward pressure on prices due to supply disruptions and geopolitical risk. Russia, facing sanctions, continued to supply markets, arguably keeping prices lower than they otherwise would have been, but still contributing to volatility.
If a resolution is reached, bringing a degree of stability to the region, the incentive for Russia to flood the market may diminish. This potential reduction in supply begs the question: would it automatically translate into a rebound in oil prices? While a logical assumption, the market is rarely so straightforward. Many other variables are at play, including global demand, OPEC+ production policies, and the overall economic outlook. This situation presents a complex scenario where fading the initial news reaction may be a viable strategy – but careful consideration of market dynamics is essential.
US Oil (WTI) Technical Analysis: A Multi-Timeframe Approach
A thorough analysis of the price charts across different timeframes provides a clearer picture of the current situation and potential future movements in oil prices. The following sections will detail a breakdown using daily, 4-hour, and 1-hour charts from TradingView. Understanding support & resistance levels is a vital component of this analysis.
Daily Chart: Established Downtrend
Looking at the daily chart, it’s clear that US Oil (WTI) continues to trade within a dominant descending channel established throughout July. Currently, the price is hovering around the midpoint of this channel, suggesting a degree of equilibrium. Trading activity has remained contained within a range between $59 and $60.50, an area representing long-term support and immediate consolidation.
The Relative Strength Index (RSI) is tilting downwards, indicating growing bearish momentum. However, the Daily Momentum remains above the 40 level, suggesting it’s not overly sold and that a sustained breakdown is not yet confirmed. This balance leans toward continued rangebound trading in the short to medium term. This pattern is suggesting stability, but within a larger overall downtrend.
4-Hour Chart: Key Levels to Watch
The 4-hour chart provides more granular insight into potential trading levels. Several key resistance and support areas have emerged:
- Resistance Levels: The $65-$66 range represents a significant September high acting as strong resistance. A higher area to watch is the $62-$63 range, an important timeframe pivot point. $60.90 also represents weekly highs to consider.
- Support Levels: The $59-$60.50 area, previously discussed as a long-term support and consolidation zone, now acts as a pivotal support. Below that, we have the $55-$57 range representing support from earlier this year. The October 2023 lows at $56.38 and the hourly channel lows at $57.50 also offer potential support. Lastly, the past week’s lows at $58.26 are worth monitoring.
These levels will be crucial in determining the next directional move in oil prices.
1-Hour Chart: Short-Term Pressure
The 1-hour chart reveals that sellers are attempting to push the price below the $59 support identified on the higher timeframes. A successful break below this level could lead to a test of the previous week’s lows, around $58.56.
The hourly channel boundaries are acting as significant support and resistance points, guiding shorter-term price action. The 1-hour RSI is approaching oversold territory, and continued downward momentum would confirm that sellers maintain control in the immediate future. Therefore, a break below $58 and a test of $57.50 should be viewed as potential shorting opportunities, contingent on overall market conditions.
Conclusion & Trading Strategy
The potential for a US-led resolution to the Russia-Ukraine war has undoubtedly shaken oil prices, leading to immediate selling pressure. However, predicting a complete collapse or a swift rebound is overly simplistic. A multi-timeframe technical analysis of US Oil (WTI) reveals a market currently in a delicate balance.
The overall trend remains downward, but short-term opportunities to fade the news and potentially profit from a rebound within the established range may arise. Traders should carefully monitor key support and resistance levels identified on the 4-hour and 1-hour charts. Paying attention to the RSI and Momentum indicators can provide further confirmation of potential directional moves.
Remember to prioritize risk management and consider your individual trading strategy before entering any positions. Stay informed about geopolitical developments and economic data releases, as these factors will continue to influence the oil market significantly.
Safe Trades!
Follow Elior on Twitter/X for additional Market News, Insights and Interactions @EliorManier
Disclaimer: Opinions are the authors’; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. The provided publication is for informational and educational purposes only. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award-winning forex, commodities, and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please refer to the MarketPulse Terms of Use. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2025 OANDA Business Information & Services Inc.